Credit Suisse bans trading in Venezuelan bonds

August 16th 2017 | Multiple countries | Banking | Credit Suisse

Credit Suisse AG has banned its traders from dealing in Venezuelan bonds and other securities, according to media reports on August 10 citing an internal memo. A company spokesman confirmed the contents of the memo to media outlets. The purchase of Venezuelan government securities are seen as tantamount to providing the country's authoritarian regime with a crucial source of financing.

On July 31st the US Treasury announced that it was imposing sanctions on Venezuela's leaders, following a move by the country's president, Nicolas Maduro, to install a new assembly to rewrite the country's constitution.

In addition to all bonds issued by a Venezuelan entity after June 1st, Credit Suisse will prohibit the trading of two sovereign bonds, one maturing in 2036, as well as a bond linked to PDVSA, which matures in 2022. Furthermore, the bank's office for reputational risk will now be tasked with monitoring and approving any transactions in Venezuelan bonds or with Venezuelan parties.

In October 2016, Credit Suisse facilitated a US$2.8bn bond swap by the state oil company, PDVSA. Earlier this year, Goldman Sachs Group Inc purchased US$2.8bn worth of bonds from the Venezuela's state oil company for 31 cents on the dollar—a decision that drew widespread derision from the country's opposition. Nomura Securities, a Japanese investment bank, was also criticised for a similar purchase involving US$100m worth of bonds.